Week 6 Reflection

Decision- Making Processes

In any discussion of change within an organization, the issue of decision-making is not far below the surface. In order to make changes, decisions must be made. This micro lecture will examine decision-making and issues in the decision-making process.

Decisions can be grouped in two main categories:

1. programmed - The problem has a relatively structured solution which is based on standard methods. If the standard method is not successful, often problem solvers will resort to methods, which worked in previous situations. These alternative approaches involve hueristics, or rules of thumb, which correspond to previous experiences in which an alternative solution worked.

2. nonprogrammed - Nonprogrammed decisions deal with problems for which there are no "standard" methods, policies or rules. Solutions to these problems call for innovative measures or unusual application of rules and policies. Sometimes finding a solution means looking at the problem "backwards" or "inside-out." How a problem is perceived is sometimes a key to finding a solution.

Managers make decisions alone, but more often as a member of a group. These circumstances favor what I characterize as group decision-thinking/making; hereafter, use of the term decision-thinking in the group context includes decision-thinking. When a problem requires a mix of expertise (economics, organizational theory, industrial relations, etc), or has multiple parts that can be addressed by a division of labor, use of group consensus also expedites the group's acceptance of the decision by soliciting a range of ideas. Frequently, group decision thinking-making leads to higher quality solutions. Personalities and capabilities may enhance (or hinder) decision-making contingent upon the organizational culture. Some cultures encourage group problem-solving conditioned on the amount of time available.  Group decision-making may take relatively more time than individual decision-making (Gordon, 1996).

Change within an organization does not always come about through generally accepted practices. Examining decision-making as a process is a means of identifying the steps that go into decision-making.  However, without taking into consideration the "cultural" characteristics of the organization can have delirious and unanticipated consequences. Each organization is unique, and hence, approaches decision-making in different ways. Decision-making and the decision-making process can be described by means of models. For the purposes of our discussion, we will examine two important models of decision-making: the rational model and Herbert Simon's "bounded rationality" model.

Models of decision-making

Rational Decision-Making Model. This model stems from the logical-positivists who operate from cause-effect relationships that are predicated on the notion that given the facts the decision can be logically deduced.

The rational decision-making process consists of six steps:

1.  Analyze the situation - Determine the nature of the problem.

2. Set objectives -Identify the characteristics and components of the desired state.

3.  Search for alternatives - Identify ways in which the desired state could be attained.

4.  Evaluate alternatives - Appraise each alternative in terms of cost/benefit.

5.  Make the decision -Choose one of the alternatives, or a combination of two or more alternatives and decide on the action to be taken.

6.  Evaluate the decision - After a specified length of time has elapsed, review the decision to determine if the course of action chose achieved the desired state.

The rational model, despite its thoroughness, presumes that decision-makers have the time and resources to examine a wide range of alternatives. Modern managers in the public, private and independent (nonprofit) sectors, rarely have the time or the staff to investigate a wide range of alternatives. They need to have the problem solved in a quick and cost-effective manner.

Bounded Rationality

Herbert Simon won the Nobel Prize in economics for his work in decision-making models. Simon contends that organizations control behavior by virtue of controlling the premises on which organizational decisions are made. Rather than search for the optimal alternative, the manager attempts to "satisfice" by searching for an alternative that is satisfactory in terms of conditions that prevail and the organization's purposes as he understands them (Gordon,1996). The model is termed "bounded rationality" because humans do not have the capacity to process unlimited information, nor the resources in terms of time and labor to garner all the information relevant to the issue under consideration. Simon subscribes to the basic approach of the rational model, but streamlines the process. How does a manager go about "satisficing"? The steps in Simon's model are:

1. Identify the problem.

2. Design possible solutions by developing and analyzing alternative courses of action and identify which alternatives are available for implementation.

3. Decision-maker chooses a solution from among several available alternatives,with the knowledge that time/staffing and financial constraints preclude examination of all alternatives.

The manager or decision-maker understands that the decision is not necessarily optimal, but is a satisfactory or acceptable decision contingent upon the amount of resources available. Simon contends that organizations control behavior by virtue of controlling the premises on which organizational decisions are made.

Criteria of decision effectiveness

Once a decision has been made, how can a manager tell if it was the "right"one? The following criteria can be used to determine if the decision was effective:

· quality -Results in the desired outcomes while meeting relevant criteria and constraints such as efficiency (cost/outputs);

· timeliness - Make decisions within an acceptable timeframe;

· acceptance - Do those affected by the decision understand it? Accept it? Can implement it?

· ethical appropriateness - Does the decision meet the criteria of ethical justness? A decision maker's understanding of ethical justness emerges from personal, moral or societal codes of values (Gordon,1996).